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TALES FROM LEHMAN’S CRYPT – ONE YEAR AFTER THE COLLAPSE

Leslee Gelber has been at loose ends since losing her job. Ken Linton, center,
was ousted before the firm collapsed, and he began shorting its stock. Tom Ollquist,
right, sold packages of mortgages and other financial products for Lehman Brothers.

Tom Ollquist remembers Sept. 9, 2008 — the day Lehman Brothers laid him off — as if it were yesterday. “You’re not going to believe it,” he told his wife. “I was shot.”

Six days later, so was Lehman Brothers. Federal regulators let the foundering firm slip into bankruptcy, a collapse that touched off the most perilous week of the financial debacle, after years of freewheeling lending, trading and regulation produced outsize losses that devastated the banking system and brought the economy to its knees.

For Mr. Ollquist, the implosion had direct consequences: he lost his job, his savings, and his dreams of kicking back and retiring soon to become a high school basketball coach. He now spends his days making cold calls and peddling bonds for a firm that few have ever heard of, missing the old days at Lehman when he sold mortgage securities to investors around the country.

It was a good job, one that, if it did not make him rich by the gilded standards of Wall Street, still enabled him to buy the nicest house on his block in Hempstead, N.Y., less than a mile from his childhood home. His job also made him a member of a Lehman unit whose handiwork helped lead to the demise of the bank he loved and to an economic unraveling worldwide.

“I have blood on my hands,” Mr. Ollquist acknowledges, fiddling with several bracelets he wears, each with its own sentimental story, before he quickly ticks off a list of other parties he thinks are even more culpable than salesmen like him for the meltdown: regulators, senior executives, rival firms and traders who believed that their elaborate computer algorithms insulated them from risk.

As he wrestles with his conscience, Mr. Ollquist is just one among legions of former Wall Streeters who continue to move past, adapt to or struggle with an event that has been a personal and professional watershed for all of them. Their industry was certainly battered, but, for the time being at least, it has demonstrated more resilience than some analysts predicted a year ago.

While many ordinary Americans are still waiting for an economic recovery, the very worst fears of the financial industry — the nationalization of giant banks, tough new regulation, a second Great Depression — haven’t materialized. The global panic touched off by Lehman’s collapse has receded, thanks largely to all those bailouts and other government life support for banks and firms that were principal architects of the mess.

True, thousands of financial industry jobs have vanished and several of the country’s best-known banks and brokerage firms have disappeared. Since a peak in 2007, the market valuation of the country’s 29 biggest financial services firms has been cleaved by about half. But significant parts of Wall Street endure, and some firms are raking in handsome profits. Indeed, many bankers and traders are looking forward to big bonuses once again.

Some of those Lehman alumni who didn’t manage to hang on to Wall Street jobs are still angry, bitter and confused; many others, like Mr. Ollquist, have moved on in their lives. The luckiest, like Ken Linton, a former Lehman trader, made enough money during the boom years to avoid having to think about their next paychecks. He spends his time flying jets. Others, unable to find banking jobs, are building new work lives. Jeff Schaefer, a former managing director, for instance, now owns a car wash and gas station in Florida. And, of course, there are those like Leslee Gelber, who is out of work, professionally adrift, and fearful that Wall Street will bounce back without her.

THESE people worked together and occupied pivotal positions inside Lehman’s securitization machine, bundling, trading or selling packages of mortgages, auto loans and other financial products. They worked alongside hundreds of other colleagues who, for the most part, were white, male, college-educated, and in their 30s and 40s. Many of them had been at Lehman their entire careers, often for more than a decade.

The Lehman crew drank together, exercised together, vacationed together, dated one another, and kept constantly in touch day and night as they traded market information, gossip, and the ins and out of their personal lives. Once bound by the financial promise of their company stock, as well as a shared sense of professional purpose, they are now scattered far and wide, many of them tethered to parts of the banking industry that have survived or are regenerating.

Those who worked with Mr. Ollquist never made headlines. But when the firm’s C.E.O., Richard S. Fuld Jr., and his deputy, Joseph Gregory, pushed Lehman to be the No. 1 mortgage house on Wall Street from the comfortable remove of the executive suite atop the firm’s Seventh Avenue headquarters in Manhattan, it was on the trading desk, 28 floors down, that this vision was built — and where it disintegrated.

Yet few Lehman veterans, or their counterparts at other banks, blame themselves for the havoc their activities wrought. Instead, they point to the failures of regulators.

“From a policy perspective, the regulators have to step in,” says Richard McKinney, who oversaw mortgage trading at Lehman and in the firm’s last year, the bundling of mortgages and other loans. “It would be an awful lot to ask the Street to not look for revenue opportunities where their competitors are finding revenue.”

Mr. McKinney left Lehman a month before the firm collapsed, to join a hedge fund. When asked whether he raised any red flags about problems in Lehman’s mortgage business, he declined to discuss that, or any other aspects of his work at the firm. But he noted that financial companies are responsible for adequately managing their own risks.

Those much further down the corporate ladder from Mr. McKinney, including about two dozen people interviewed for this story, say they don’t feel they deserve much blame for what happened at their firm. They were just following orders, they say.

“It is very human and understandable to feel the pressure of the time and respond accordingly,” says Karen Brenner, a professor of business ethics and corporate governance at New York University. “These people were operating in a culture where this behavior was prized and rewarded. But I think it is too easy to say, ‘They made me do it; I don’t have to examine what I did.’ These people are professionals with duties and obligations to clients.”

Reluctant to shoulder what they see as an unfair measure of blame for their bit parts in the financial meltdown, many former Lehmanites also note that their firm’s demise visited dizzying and life-altering setbacks upon them as well.

“I spent a long time being very angry,” says Mr. Schaefer, the former Lehman executive turned gas station owner. “Angry for working so hard and doing so much. More importantly, for my family and all the time I was away traveling — the time I put in away from them. Now all that money I earned, the money paid in stock, is gone. I can’t go back and remake it.”

FLYING high in the New Mexican sky, Ken Linton gives little thought to the approaching anniversary of Lehman’s collapse — or his role in it.

A senior trader on Lehman’s mortgage desk, Mr. Linton evaluated mortgages that were later sliced and diced into securitized investments. In his 13 years working at the firm, Mr. Linton, 43, impressed many with his intelligence. A native of Northern Ireland, he had earned a doctorate in engineering and computer science before moving to the United States to create models for Wall Street.

In early 2007, Mr. Linton bought a small plane; it was just months before the mortgage market began to crater. His hobby seemed flashy and ego-driven to some of his peers. Asked about that, Mr. Linton says that “anyone who works in Wall Street has an ego; otherwise they would not be there.”

When Lehman closed its origination business, Mr. Linton lost his job. Rich and single, he has pursued a life of leisure since then — sailing in his 37-foot boat, playing jazz trombone and, at the moment, taking a week to learn how to fly Russian fighter jets and gliders in New Mexico. He briefly considered attending culinary school.

Although Lehman laid him off in early 2008, his departure turned out to be a boon for Mr. Linton. Being forced out convinced him to bet against the firm’s stock as a counterweight against the Lehman shares he still owned, which protected him when the stock’s value plummeted. Combined with a well-timed sale of his Manhattan apartment and a stream of income from real estate investments, the moves gave him financial padding that frees him from job worries.

“I have been fortunate to have some nice toys,” he says. “And they are all paid up. It’s a nice situation to be in.”

He recalls vividly the days in early 2007 at Lehman when his financial models began to throw up more warnings showing delinquencies and defaults, and he remembers colleagues on his desk raising questions about loan quality.

But he said the firm’s ranking as the top loan originator on Wall Street, not to mention the pressures put on the desk by Lehman’s growth-obsessed leadership, made it difficult for even the most senior executives to raise questions, even a senior vice president like Mr. Linton.

He says he has no qualms about his work at Lehman or its economic aftereffects. “Anyone at our level who had a different view from senior management would find themselves going somewhere else quick,” he says. “You are not paid to rock the boat.”

Across the country, in Lithia, Fla., Jeff Schaefer, who helped oversee mortgage originations as a Lehman managing director, is now running a Mobil gas station and a car wash. His office is the size of one of Lehman’s broom closets. Time is punctuated by the ring-ding chime of people coming in and out of the heat for a Bud Light or frozen Icees, and the screen before him shows the store’s images from security cameras — a far cry from the Bloomberg terminals that dotted Lehman’s desks.

Just two years ago, Mr. Schaefer supervised sales at Aurora Loan Services, Lehman’s mortgage-origination arm in Colorado. In the boom years, he led a 400-person team that stockpiled often-risky mortgages to disperse to the firm’s financial engineers and salesmen. He used to talk with Mr. Linton three to four times a day to get his marching orders on mortgage pricing and credit standards. It was those conversations, he says, that helped him decide whether to require borrowers to document their income or whether to give them so-called no-doc loans.

It has been a year and a half since Lehman dismissed Mr. Schaefer, but still, when the 51-year-old father of two thinks of the money he lost in Lehman stock, “that’s when the anger comes,” he says. But his anger was tempered, he says, by conversations he has had with his former employees who are faring much more poorly than he is.

The fall of Lehman, he also says, has affected his wife as much as him. She crisscrossed the country with him and their children to advance his career, bouncing from Texas to Florida to Colorado. So when he decided to buy a car wash, he let her choose their next destination, Florida.

Too many people, he says, blame firms like Lehman, but he says all that Lehman did was create a product that investors were demanding to buy from the firm.

“How do you blame us? A lot of what we did from an origination standpoint was based on investors’ appetite,” he says. “Do you think we would just go out and say, ‘I think we’re going to do $100 million in no-doc loans?’ ”

Mr. Schaefer says he isn’t ashamed of his Lehman work, but he doesn’t bring Lehman up when he meets neighbors in Florida. He also still encourages his college-age son’s goal of becoming a trader, a dream hatched in visits with his father to Lehman’s mortgage desk in New York.

His wife recently asked him whether he’ll ever dive back into the securities business.

“I don’t know,” he says. “You know what I miss? I miss the pressure. That’s what I love. I love the pressure. I just don’t have that here.”

IN some ways, daily life seems barely different for Mr. Ollquist. He’s back doing what he has done for a quarter-century: selling. But this time he’s marketing plain-vanilla bonds at a little-known, Swiss-owned firm named Tradition instead of circulating collateralized debt obligations for Lehman.

His train from Long Island leaves 11 minutes later than his old one. The trading floor still hums. His mascot — a stuffed moose — still looks down as he works the phones. And weekends are free for golf at the Hempstead Golf and Country Club.

But sometimes, it all comes back. He slips and answers his phone “Lehman!” He walks by Lehman’s old headquarters and is still surprised to see the building lit up in Barclays blue — the colors of the firm that acquired parts of Lehman in bankruptcy — rather than Lehman green. He says he will steer his oldest son, who just left for college, away from a Wall Street career. The Street, he says, no longer offers the opportunities it once did.

A salesman’s smile appears when he is asked about his regrets. He’s 45 and had hoped to retire at 50 to become a coach. That will have to wait a bit. His wife, he says, recently finished secretarial school, and he hopes she can add to their income. He says his Lehman stock was worth $6.5 million at the start of 2008. Its value fell to just pennies when Lehman filed for bankruptcy.

People close to him sense a sadness in Mr. Ollquist. His older brother, John, who retired from Lehman in 1997, can hardly remember the name of the Swiss firm Mr. Ollquist works for now.

“What the heck is the name of that place? Oh yeah, Tradition,” said John Ollquist, who refers to his younger brother by his nickname, Moose. “It’s a different kind of firm, you understand, from Lehman Brothers. People don’t call Tradition. Moose has to go out and say, ‘If you like these prices, I can get them.’ At Lehman, he could say, ‘We own them; we can sell them to you for this price.’ I don’t know if it’s better or worse, but it’s probably harder.”

For Leslee Gelber, though, there is no doubt: life is getting harder by the day. Her fortunes twisted later than others who lost their jobs before Lehman collapsed.

Last year at this time, in fact, Ms. Gelber felt like a winner. She was one of three survivors in a banking unit that had laid off 22 people in 10 months. Forty-three years old and single, she had made it in a male-dominated world, often taking on much larger workloads than her peers.

She thought Lehman would make it, and so would she. “We felt like we were lucky to have survived,” she recalls.

But on the morning of the bankruptcy filing, her life fell apart. Walking into work, she turned to an Associated Press reporter and said what many of her colleagues feared: I’ve got no job prospects. Her words were blasted everywhere, even in newspapers in her native Montreal.

The next months were anxious for most people sitting inside Lehman’s building. Barclays had taken over and the firm took weeks to decide who would make the cut. Barclays dismissed Ms. Gelber in January.

She immediately threw herself into the job hunt, blasting scores of résumés to employers and government agencies like the Federal Deposit Insurance Corporation. She took three business school classes and several seminars. She hired a tutor to teach her a mortgage computer system. Chipper, energetic and organized, it seemed just a matter of time until someone would snap her up.

Almost no one called. Her business — the purchasing of mortgages to bundle — is still moribund. Though she wants to stay in New York, she is applying to jobs across the country, hoping she will catch someone’s eye. She’s open to change, but she has found that no one wants talk with her about jobs outside her area of expertise. She says she is still optimistic that the mortgage markets will rebound.

The gym has become Ms. Gelber’s haven. She takes a spinning class and goes running. It helps keep her sane, she says.

“To not have a job doesn’t feel good,” she says. “I like going to the office, having structure in my life.”

She’s tried to spend more time volunteering, but several hospitals have told her they have no room for additional volunteers. She’s tried to network at conferences, but the conferences, which are pricey, are often half empty.

The hardest part is all the downtime, she says. When she’s not in classes or at the gym, she’s in her apartment surfing the Web for jobs. She has forgone any big vacations this year because she says she “won’t enjoy it, knowing I don’t have a job.”

The year has been by far the hardest of her life, she says, even harder for her personally than after the Sept. 11 attacks that convinced Lehman, which was once located near the World Trade Center, to move its headquarters uptown. She said she was home sick that day and did not lose anyone she knew. So for her, life moved on, because Lehman moved on and she had a place.

The battle now, she says, is a lonely one. “It’s mental,” she confides.

“I can’t sit home like this,” she continues, her voice rising. “I want to work. Lehman was who I was. I really loved it there. I was proud to be there.”

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